All you need to know about bankruptcy

Excessive debts and foreclosures may push you into thinking that bankruptcy is the best solution.This is a step that you should take after careful consultation with experts. Bankruptcy will stay on your financial record for a long time. Also, the updated Bankruptcy Law has made it difficult to file for bankruptcy. This law was passed in 2005.

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How can you file for bankruptcy?

If you are faced with financial turmoil such as a foreclosure, declaring bankruptcy is the most suitable way to get rid of your financial drawbacks.

The process of filing for bankruptcy has several steps. As soon as you file, you will be required to provide a detailed explanation to the presiding bankruptcy trustee about how got into this crisis.

The former type cannot be utilized to pay your debts. Examples include your personal items or some part of equity in your automobile or home etc.

The latter category consists of goods that can be seized. These goods can be sold to pay off your debts. Your residential property other than your primary home, boats, recreational vehicles etc are some of the articles that can be utilized for this purpose.

Once you have provided all the necessary information, a bankruptcy trustee is appointed with the task to ensure that your secured debt is paid in the set time period. In due course, the court will issue you a stay order that will keep creditors off your property. This will also stop them from pursuing a lawsuit to get your property.

What are Chapters 7 and 13?

You may choose between Chapter 7 and 13 according to your situation. The features of these both are as follows:

Chapter 7

This chapter provides you with a liquidation option. This means that you will be able to keep your exempted assets and all of your unsecured debts will be discharged. You may use your non-exempt assets will be used to pay secured debts. Any debts from child support or taxes etc will not be supported.

If you have a few assets and low income, then this is the best option for you.

Chapter 13

This chapter requires that you pay your debts over a specific time period of three to five years. This is carried out through a repayment plan. In this procedure, a trustee will be required to collect payments from you which will then be transferred to your creditors.

You will be able to keep your home and avoid foreclosure.

If you are interested in keeping your non-exempt property and avoid property seizure then this is the right option for you.

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